Intel and Amazon extend partnership to design new chips, support manufacturing plants, benefitting both companies.

From Nasdaq: 2024-09-24 04:45:00

Intel (NASDAQ: INTC) and Amazon’s (NASDAQ: AMZN) AWS extended partnership includes co-designing new computer chips and supporting Intel’s manufacturing plants. Intel’s stock rose 10% initially but remains down 70% from its peak due to competition. Amazon’s significant spending on chips makes the partnership valuable despite doubts about Intel’s future.

AWS is the largest cloud provider, spending billions on semiconductors. Intel, falling behind in AI, seeks to catch up to Nvidia and AMD. This partnership benefits both companies, with Amazon seeking to reduce dependency on Nvidia and Intel needing financial support to compete.

The partnership also involves designing chips for Intel’s Ohio manufacturing plants, aiming to boost its foundry business. Intel, facing operating losses, needs customer commitments to cover manufacturing costs. Government grants like the CHIPS Act can help subsidize the business.

Intel is currently facing a financial rough patch, burning over $12 billion annually. However, potential government subsidies and partnerships with Amazon provide hope for its recovery. With nearly $30 billion in cash reserves, Intel can withstand temporary losses from its manufacturing investments. Investors may want to consider buying Intel stock for long-term growth.



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